Good morning, and welcome to the Wynn Resorts second quarter 2013 earnings call. Joining the call on behalf of the company today are Steve Wynn, John Strzemp, Matt Maddox, Kim Sinatra, Gamal Aziz, Maurice Wooden, Scott Peterson, Ian Coughlan, President of Wynn Macau, and Robert Gansmo, CFO of Wynn Macau. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then 1 on your telephone keypad. To withdraw your question, press the pound key. Now I would like to turn the call over to Mr. Maddox. Please go ahead, sir.
Thank you, good morning, everyone. Before we get started, I just need to remind everybody that we will be making forward-looking statements under the safe harbor of federal securities law, and those statements may or may not come true. With that, I'm going to turn it over to Steve, who is actually in Macau right now, to kick off the call.
Yeah. Just came in. It's 8:30 at night here and 12 hours earlier than actually later than New York. Reprogramming some of our fountains with Kenny Ortega and the group. That was a lot of fun. Today's been a really good day for us. We signed our contract, the final contract with the guaranteed maximum price, with Leighton, that fixed two things. Our guaranteed maximum price, we know the cost of the project now is $4 billion, maybe a little less, but no more than 4. We know the completion date is, we have an early completion date of January 16, so we make Chinese New Year in 2016. If they miss the early date, which they don't think they will, it's April 2016, not 2017. We're well underway.
Our foundations are coming up on the last few months of all of the pilings and caissons and stuff that we had to go so deeply into the Earth to support the new building. It was two and a half years in design. It's by far the most aggressive, ambitious, and lovely project that I've ever been involved in in my 47 years. I think that it's going to be a great addition to Macau. I think it's going to further enhance the growing strength of the Cotai area. That's been very good news for all of us. The earnings are I'm happy with it for the year. I tend to look at things on a broader brushstroke, perhaps, than some of you will in your questions.
Between Las Vegas and Macau, we're about $100 million ahead of where we were this time last year, and that's pretty good when we were pushing $1.6 billion last year. We're tracking towards a healthy growth for the year. In Macau, we did $292 million, and last year was $302 million. Last year, we had a $21 million unique one-time-only credit adjustment in which we credited ourselves $21 million. If we compare apples to apples, we'd be a little ahead this year. Many of you asked questions about mass marketing and VIP trending. We're basically up in the non-casino revenue. We're a little behind in slots, not in coin in, but in a whole percentage.
The mass market sequentially was behind the second quarter of the first, it's been a bouncing ball with us because we're 22% ahead in July, with three days to go in mass marketing. We're very happy. We were able to get more efficient. Our run rate of operating this place is a little less than it was last year. We have about 10% at current levels, between 10% and 11% of the revenue in this 30-odd casino market, but we do have one-sixth or 16% of the profits, and that's the most important thing we're concerned about, is the bottom line. Without further ado, Ian is here. I'm with my colleagues in Macau this week, and we're all on hand early in the morning in Las Vegas to take your questions.
At this time, I would like to remind everyone, in order to ask a question, please press star one on your telephone keypad. Again, to ask a question, please press star one. Your first question comes from the line of Joseph Greff of J.P. Morgan.
Good morning, good evening, everybody. Steve, I'll start off with a broad-brush question here. The Macau media of late has been reporting on the government potentially looking at concession, sub-concession renewal discussions starting perhaps as early as 2015. Can you talk about your expectations or views on what, if any, changes they may be looking to place around the renewals? I'll leave it as broad as that. Thank you.
Well, I was in fact in such conversations today. I feel very comfortable being in Macau. I certainly don't have anything to do with the specifics of the government's final decision, I know that the matter is to be addressed in 2015. Speaking for myself, after 12 years in Macau, I feel sanguine and comfortable about being here and plan on being here a lot longer. I think that probably answers your question.
Okay. Maybe this is for you, Matt. The margins in Macau were about 210 basis points below what we were looking for. Volumes were basically right in line. Were there any adverse mix shifts in VIP between direct and junket or maybe even in mass between premium versus non-premium mass that would have accounted for some of that?
Yeah, Joe, that's exactly right. We held less than 2% in our direct program. As you know, in the direct program, the margins are higher. While our overall junket hold was 2.94, we held high on the junket space and really low on our direct, that was the reason.
Was there anything weird on the mass side overall?
No, only in June. That number that everyone was focused on, there were some hold issues in June in both slots and mass tables. Overall, it was pretty normal.
It's been corrected. It's corrected itself in July.
That 22% number, Steve, that you mentioned, that's a sequential number? Or is it a year-over-year number?
That's year-over-year. It's up sequentially too.
Got it.
In double digits.
Hold it. Robert, here. What's the sequential look like?
Sequential, it's up about 13%.
Plus 13%, Joe.
I'm sorry. It's 22% up year-over-year, our run rate is probably about flat with Q1, which is our best mass gaming quarter, up 13% over Q2.
Right.
Great. My last question, Matt, of the $2.5 billion of cash and investments, how much of that is Macau related?
Half. It's right at half between.
Thank you
the Asian subsidiary.
Thank you.
Incidentally, I forgot to add, we had another nice quarter in Las Vegas at $130 million. Just thought I'd mention it.
Great. Thank you.
Your next question comes from Felicia Hendrix of Barclays.
Hi. Good morning. Good evening. Steve, since you mentioned Vegas, I'll ask. The margins were actually much better than we were looking for. I was wondering if you could discuss some of the initiatives you might have been taking on the cost side there.
You know what happens, because of our sort of a premium niche that we have here in Macau, and that customer base makes its way to our place in Las Vegas. The same thing is true of Brazil, Chile, Colombia, and Mexico. Last year, we won about $600 million at the tables, another $177 million in slot machines. 52% of that is Asian, 24% is Latin, 24% is domestic. In slot machines, I'd say $25 million or $30 million of the $170 is international. Our brand, because of the market segment we cater to, tends to benefit from the international market. These emerging markets, a lot of people are enjoying success outside the United States, and they make their way to Las Vegas, and I think that we're one of the first choices for that kind of visitation. We cater to that business aggressively.
That would be my comment. It does introduce volatility to our business, but we've got so much of it. We can afford to deal high, because at any given moment, we have a handful of people playing $100,000 or $200,000 a card in games. We're benefiting from that, and I think that's probably the most relevant answer I can give as to our margins. International. We're not dependent upon the United States, primarily, but from outside the United States.
Felicia, as you'll notice in the press release, we talked about the $12.2 million credit in the quarter as we, every June, do a historical analysis of our collections in Las Vegas.
Yes. Thank you. Ian, in Macau, you guys talked a bit about, and it was very helpful, I think Steve mentioned, about what's going on in the mass side. Obviously, everybody there is now trying to go after the premium mass customer. I was just wondering if you could talk about how competitive that environment is. Obviously, people are sampling new products. As you talk to some of your customers who might be sampling, what are they saying, and are they eventually coming back to you guys?
The mass market high limit side is hypercompetitive, remains hypercompetitive, and we've just been focusing on taking care of our customers, delivering high-quality service, and trying not to get into the heavy discounting promotional battle that's in the marketplace. A number of our competitors have corrected mistakes they've made in the past. They've also built new facilities, and they're ramping up their business. We're maintaining a very nice quality level of business. We opened Encore, and it was a success from the first day we opened. It continues to be the mass market high limit area in the marketplace, and our customers are very satisfied. People do shop around. People will move for discounting. Players always gravitate back to quality, and service consistency is where it's at in Macau, and that's what we've been focusing on.
Thank you. Just quickly, Ian, do you expect any construction disruption from the hotel renovation?
There's mild disruption. We're not doing heavy renovation. We're refurbishing our guest rooms. We're doing all 600 keys in our Wynn Tower. We're just over seven years old. They've been incredibly well received. We've taken the palette from Wynn Las Vegas Tower suites and rooms. So far, the reaction has been excellent. We've done five floors so far. We'll be finished by late November.
Great.
Very little disruption. We have 100 keys left to sell each evening, so there might be mild impact from that on the gaming side. Overall, it's been very well received and very few complaints.
We are out of order with a portion of our inventory.
100 rooms, approximately.
Yeah. About one-sixth of our rooms. We're operating at a little bit of a deficit, especially since we have such a high utilization of our rooms by VIP customers. It's very difficult for us to sell rooms for straight cash here because we have such a large component of high rollers and bigger players that justify complimentary services. We have only 1,000 rooms here, and they're used all the time. All the time.
Great. Thank you so much.
Your next question comes from Carlo Santarelli of Deutsche Bank.
Good morning, everyone. Steve, now that you mentioned, obviously, having the guaranteed maximum price in place for Cotai and having a better sense of the timeline of that project, as well as maybe a clearer sense of what's going on in some of the domestic projects you guys are currently in the process of, how are you thinking about capital allocation here throughout the rest of the year 2014 as you're cognizant of the spend required for the other initiatives?
It's a perfect mathematics question. Might as well get the main guy to answer it.
Sounds good.
Carlo, as you know, on capital allocation, we put in a $1 a share dividend per quarter to provide investors with stability as we go through this growth phase. As new projects come on board, we plan on always keeping that $1. If there's excess cash flow available at the end of the year, the board will decide what they want to do with it. Just so you know, on Cotai, we just are about to sign an additional $200 million accordion on our bank facility at LIBOR plus 175. Cotai is pretty much fully financed. Future projects are really just speculative right now. Again, we have $2.5 billion.
At under two and a half or less.
That's right.
Matt did a wonderful job.
That's right.
Just an update for Philadelphia and Boston.
Nice to be investment grade. Philadelphia and Boston. Well, we're hard at it, as you know. Five or six applicants in Philadelphia for that remaining license. There'll be shenanigans, I'm sure. Someone told me that the SugarHouse people wanted to say that the state of Pennsylvania doesn't have the right to issue a license that they took back previously. Sort of a ludicrous, preposterous thing. Those guys, if they think that we're going to win, they don't want to see us there until the last possible minute. I don't blame them. When you see some of these facilities, they're boxes of slot machines. They don't really have any tremendous magnetism to them. They just sort of cater to the locals.
In Massachusetts, we got through our host agreement nicely, made a guaranteed payment to the people of Everett that helps them enormously, plus a lot of other improvements we're doing to make the area pretty and give it a good invitation to people to visit. We had our host community required vote, and we got almost 87% of the people who were enthusiastically in support of us. We're waiting for the state of Massachusetts to finish its suitability investigations on the various applicants in Springfield and Boston. Of course, the folks at Suffolk Downs, for example, one of the applicants from Boston, they have to finish their host agreement and then have a vote in their communities, whatever those communities are. We have to wait on them to find out what's going to happen, which will probably be after the first of the year.
Maybe sooner in Pennsylvania. That's not a schedule we control. We have designed facilities that we think will be profitable and give us a tremendous return on equity. We sit with a lot of cash, and in today's world, we can't make very much money on our cash. When we deploy it in our own business, then it's another story. I think I may have said this in a previous call, but we see $900 in Pennsylvania with a $300 or $400 million equity investment that we can make $150 or $175 on. We see Boston at $500 or $550, I think we think we can make $300 on that equity. We think we can borrow a conservative amount of money at favorable rates to make up the balance of those projects in the form of mortgage financing.
It's a way to pick up $400 or $500 million with our new concept of Urban Wynn. This idea of Urban Wynn, which is being suggested to the authorities in Pennsylvania and Boston, it's worth repeating, if I didn't say it before, the era of the grand hotel is gone. The day of the Waldorf Astoria, the Plaza Hotel, the place that people go to stay and visit. That isn't happening anymore because of the cost of rooms for construction and the internet Hotels.com kind of pressure on the pricing. What you get is stores on the ground floor, then some office floors, then some hotel floors, and then some condo floors. Mixed-use buildings that are places to stay, but they're not places to visit.
When the government of Pennsylvania or Massachusetts decides, however, that they're going to put the casinos in the city, now we have a horse of an entirely different color. Where we have stood off from racinos and riverboats, not our thing. We build hotels that people like to come and stay at. We specialize in high-class service, big rooms, fancy bathrooms, great restaurants, and good food and all that jazz. You notice all that's non-casino talk. A slot machine, a blackjack table has zero power. They're commodities. They're the same everywhere in the world, in a dumpy little box of slots or in a fancy place like a high-end casino. It's the non-casino things that drive the business.
Now, with these new laws in these states that allow metropolitan casinos like Boston, for example, or Philadelphia, you can build a beautiful hotel with an atrium lobby, with restaurants that have indoor/outdoor experiences, with shops, a wonderful spa, meeting rooms that have gardens outside. Then down the hall, and a room that's 800 or more sq ft with 175 or 80 sq ft bathroom, separate shower, separate tub, water closet with a bidet and john, two sinks, makeup area for the lady, integrated closets. We can do all that in big rooms that have sitting areas and large screen televisions. That does not exist in New York, London, or Boston or Philadelphia at the moment. We can build what I call a grand hotel, and then if you're a person that wants to gamble, you go down the hall.
Families can enjoy everything I just mentioned without ever seeing a slot machine or a blackjack table. If you go down the hall as if you were going to a ballroom in a convention area, you go through double doors, adults only, and there is a casino with Starbucks and a deli, a food court, a noodle kitchen, bars, and a sports bar and all that other razzmatazz that makes a casino exciting. It'll have separate access from parking that's covered and heated so that people can drive their car right to their favorite slot machine. That is an urban casino, and I think that we're going to see more cities open their doors and invite the kind of projects that Massachusetts and Philadelphia are encouraging.
I want to have one or two right away so that I can demonstrate the model for this kind of project, just the way Mirage and Bellagio sort of set the stage for destination resorts of a modern era in Las Vegas. I'm interested in this. Matt and Gamal and all the rest of us, and Kim, we've been at it, working on this. We don't know whether we'll win or not. We sure as heck have put our best foot forward.
Great. Thank you, Steve.
Yeah, sure.
Okay.
Your next question comes from Thomas Allen of Morgan Stanley.
Morning. Just two on Macau. What's the latest on the high-end slot initiative you've been talking about the past three quarters? It seems like some of your Macau competitors may have been more aggressive at pushing table minimums than you have been. Do you think that's fair to say? Is that a potential opportunity for you? Thank you.
If they've been more aggressive in pushing table minimums than we have, then you've just told me something I didn't know. Linda, do you want to respond to that?
It means table maximum, not-
Table maximums or minimums? What did you mean, sir?
Table minimums.
What did you mean exactly? You think that other casinos in Macau have upped their minimums more than we have?
Yes. If that's not fair to say, then we're wrong, or I misread it.
We wouldn't know that. Hell, with the kind of customer base we've got, we've got as many high limit, high minimum tables as anybody. Most of these joints at Cotai are dealing to mass market. In the VIP area, we're right there.
I think what you also see is that basically we have an average bet that significantly exceeds the minimums anyway. I'm not sure that raising the minimums actually has much impact for us.
We never would've focused on that if you hadn't asked us the question.
Table minimums are managed. Actually, we change them.
Constantly
Day to day.
Linda just said, I don't know if you could hear her on this phone, that we change these minimums by the hours each day. It's not an item that's relevant to us, and I don't think that particular thing should be relevant to you. How we manage minimums is an asterisk in this game. It's how many people are betting the maximum.
Okay.
I'm trying to be helpful. I'm sorry.
No, it is helpful.
Okay.
Just on the slot initiative.
Well, who can answer that? Robert or Ian.
We opened a newly renovated
High Limit Slots area. We also extended the facility. It's been very well received. Clearly, our competitors, we all learn from each other. We got ahead of other people, they got slightly ahead of us, we're back ahead of them again. We're very happy with how it's turned out. Our customers have been very happy with it. Next time you're in town, we'd be happy to show it to you.
We just don't throw money at it. This chasing the top line is a fruitless exercise unless it results in the bottom line. I want to repeat, we may have 10% or 11% of the top-line volume because of all the new hotels that have opened, but we have one-sixth, 16% of all the profits at these 32 casinos here, or 33. That's the number that I'm really focused on, the bottom line. We watch everybody. We'll see all the earnings at the end of the second quarter. We heard Sands, they did a wonderful job. I don't know how Caesars and Melco did yet. We'll find out soon enough. We're perking along at $100 million a month, maybe a little better.
Thanks.
Yeah.
Sorry.
Anyway.
Just on Vegas, there's a view that there may be a recovery in Vegas. How do you feel about that? Your non-gaming appears to do very well. Should we take that to imply that you're not feeling any impact from all the new F&B in the market? Thanks.
Look, as I've said before, we think the driver is the non-casino end of the business, not the casino. We think the casino is a result, not a cause. We're really assiduous in applying ourselves to that. Our nightclubs weren't just about who the best disc jockey was for the moment, because that's a very changing scene. Our nightclubs and that food and beverage revenue that we're so proud of and that you're noting is a result of years of planning before. We were two and a half years before we broke ground on The Cosmopolitan, working every week. Las Vegas, the same thing. Those nightclubs, they're more than just great big boxes or places to put tables and prop up a DJ. They're environments, and those environments have an emotional effect on the people that come to us, and we design to emotion.
When the competition decides to challenge us by paying a disc jockey more money, for example, which is a popular idea these days, and take a disc jockey from $200,000 to $400,000 a night, it doesn't have the effect that you'd imagine. Our customers stick to us with loyalty, not because of any other reason, except that we offer a better environment for them. At the end of the day, when you're recreating, when you're out playing at night, when you're going to a nightclub, it's the environment you're in that matters. I think our food and beverage numbers are reflecting the fact that we can withstand a competitive challenge in Las Vegas.
We have, as you know, you can compare us to anybody on the Strip, even my own places, my own older places, practice hotels like Bellagio and Mirage, we hold our own against bigger hotels even, more rooms like MGM, we hold our own. They throw plenty of money at the customers, boy. We bank on other things that are more enduring, I think is the way to say it.
Any view on if there's a recovery in Vegas underway?
I've always been sort of neutral about using the word recovery. I think that Las Vegas is doing better than it did last year, the extra capacity that came on during the recession was poorly timed. Some of it was Encore at Wynn, CityCenter. We all could have picked a better time to build those buildings. I'm including myself in that group. It is what it is. The amount of money that has been lost in Las Vegas in the last four years in terms of abandoned projects and marked down values from the Frontier and the Stardust property to Fontainebleau and Cosmopolitan and CityCenter and places like that has been astronomical. I don't even like to think what that number is. Las Vegas is perking along because of the tremendous choices that are available to people of every income level.
The infrastructure in Las Vegas is almost impossible to duplicate, that's the reason why it survives California Indian gaming and all these other jurisdictions. It doesn't get any easier, Las Vegas is managing to hold its head up. If we had a real recovery in the United States, I don't think we are having a real recovery in the United States. I think we're having a limp-wristed sort of crawl out of a hole. A recovery is a more robust word, and I don't see it in the country as clearly as the politicians do who are trying to sell it to the people. I think most of it is baloney. I think real inflation is way north of 10.
Everybody's dollar is going- Power and the living standards going backwards from my working people of America, and that's taking a toll on what you would call a recovery. I don't see it myself.
Thank you.
That's it.
Your next question comes from Cameron McKnight of Wells Fargo.
Great. Thanks. Good morning, and good evening. A question first for Steve, Ian, and/or Linda. Could you offer some thoughts on the macro outlook in China? We've seen a lot of ambiguous macro data recently. Specifically, some data that we see and collect indicates that sentiment amongst high-end Chinese consumers remains very strong. Just wondering if you can talk to that and some of what you're seeing in your business specifically.
Well, obviously, everyone's aware of the liquidity issue in China. We're very cautious of how we handle our credit and collection, we really haven't felt any effect on our business or economy here yet.
Our customers are not pessimistic, Linda is careful about the credit. We always are, as you know. You've been hearing that for us for years now. It's been 47 years I've been in business, we've never had an adjustment to our reserve. Only 47 years.
Great. Great. Thanks. Just as a follow-up, we've seen some of the visitation growth pick up over the last couple of months, specifically in the data, we're seeing northern Chinese visitation pick up. Are you seeing some of that reflected in your customer mix?
In general, yes and no. We actually see a pickup across besides north and also to the Guangdong province area. Both sides are picking up.
You don't always see a natural reflection on the breakout of visitor arrivals into the city and to the people that are staying directly in the casinos. Day-tripping activity has reduced and moved away from Guangdong, and there are more overnight stayers with all the extra rooms in Cotai. There are people coming and staying one or two nights, and they're coming from further afield. The high-speed train network is certainly helping, and the increase in the Individual Visit Scheme is also benefiting. We are getting more people coming and staying longer.
The plan that the government of Macau implemented in 2002 to change this place and make a destination city rather than a day-trip city. That plan, that goal, which led to the expansion of the concessions, has by and large, taken foot and is thriving. The construction of the fabulous hotels in Cotai is causing people to come and stay overnight. Macau is becoming a destination resort, not just the baccarat game, the neighborhood baccarat game. It's happening as they planned. It was a very articulated program that led to the two new concessions that Galaxy and my company received, which supported the expansion of the three sub-concessions of MGM, Melco, and The Sands. It's all happening. Thanks to Sheldon Adelson, thanks to Jamie Packer, and Lawrence Ho. Thanks to the Lui family. Francis has done a great job at Galaxy.
These are smart guys, they're doing really nice places. Beautiful, big rooms, lots of choices. This place is getting very powerful, it's supporting on an ever-increasing basis, still, a good growth rate. I can't wait till this 28 or 29 months goes by so that we can get open in Cotai, because we're going to toot our horn when that time comes. We've taken into account these guys and what they've done, these competitors of ours. Man, it's put us on our game. You don't take anything lightly and competitively in Macau. These are smart people, they've got money, and they know how to deploy that capital. There's a lot of choices, fun things to do here, it's the first time that any city has ever begun to offer the choice that Las Vegas, Nevada, U.S.A., has offered.
I thank God they're 6,300 nautical miles away, there's room for both of us. I'm happy to be in both markets, it's just great. Cotai is causing this town to change. This is not Atlantic City in the sense that it's a local market. This has now become a place where people travel to. Stays are getting longer.
Perfect. Thanks very much.
Sure.
Once again, ladies and gentlemen, in order to ask a question, please press star one on your telephone keypad. Your next question comes from Harry Curtis of Nomura.
Hi. Two quick questions. First, what will be your annual cash contributions to the project in Cotai? Secondly, Steve, if you could talk to the special features that Cotai will have that should lift its ROIC comparable to what you're doing on the Peninsula. Thanks.
Harry, just for some CapEx history. We've spent about $300 million to date. I would expect us to spend another $300 million for the rest of this year, likely $1 billion in 2014, and the vast majority of the rest of the spend in 2015, leaking over into the beginning of 2016. We'll probably utilize between 30%-40% of our free cash flow when you look at our model, and we currently have $2.5 billion of debt with over $1 billion of cash on hand and a $1.5 billion revolver undrawn right now. That's basically how it'll shake out. One last thing I want to point out, a lot of people quote various numbers for construction costs for projects in Cotai. Our $4 billion is all in.
If you look at hard cost plus owner supplies plus FF&E, what a lot of people like to quote, the thing that hits the cash flow, that's $3.5 billion. The remaining $500 million, pre-opening expenses, our land lease payments through 2016, and capitalized interest.
A lot of that money gets paid after we open too.
That's right.
Harry, does that take care of that part of your question? I'll get to the features. All right, Harry, did Matt deal with that satisfactorily? Now about the features. We're famous or well-known or earned our bones anyway, by having public entertainment. We started with Volcano at The Mirage.
I hear a lot of voices on the phone. Then we had the pirate show, the pirate ships that sink, then we had the dancing waters, et cetera. Then we got the tree of prosperity and fountains here in Cotai. Cotai is going to be, in one respect, if you're on the outside, reminiscent of Bellagio. We've got an eight-acre lake that's strategically placed in front of the hotel, and we've placed all of the high-end gaming on the water and the restaurants on the water. We filled the lake with new versions, new technology of water that dances and colors and lights. It's a very complex, expensive, very advanced water and light show, including fire.
From the street in front of our property and surrounding the lake and going into the hotel is a Doppelmayr gondola that holds eight people at a time with several thousand hour capacity. That gondola is equipped with music and air conditioning, and people get off the monorail, the light rail that the government is building starts at the ferry terminal and we're the first stop. It goes around two sides of our 52-acre site, the north side, and then finally the west side. In the middle of the west side, approximately in the middle of the lake, on the street in front of the center line of the lake and the hotel, the light rail comes to an end, makes a stop, its first stop, as it journeys through Cotai.
The name of the hotel is the Wynn Palace. Wynn Palace is the name of the hotel, and the light rail stops at the midpoint of our lake, and bridges go to the west to City of Dreams, the Hyatt, and MGM, and they go to the east to our sidewalk because we're opposite both MGM and the City of Dreams. Each of their sites, it's approximately half of ours. People load the gondola as they come down the escalator from the light rail. They go around the lake, then they stop, they get off the light rail, the monorail, and they go into the gondola. They rise above and go around and through the lake and through the fountains, and then get inserted into the building, into the retail promenade.
At the north and south entrances of the hotel, there are three major ways into the hotel besides the gondola. That's our attempt to capture the light rail traffic by making an irresistible kind of e-ride for them to experience. There's a north, south, and a bus entrance, three different entrances, north and south atrium, then a bus entrance at the east side. In each of those three arrival moments, we have placed attractions and features. For example, I haven't announced this before, but I think it's time to share with everybody. I mean, we're far enough down the road. The theme of this hotel is flowers, floral things. The use of flowers, of water and natural light and flowers has been taken to a new level for our company.
We have in these atriums, floors that open, and from the horticulture department below, big, huge displays of flowers ascend, and they change every month. One of the things that was charming about Bellagio was that it was seasonal. We had fall and winter and spring and summer. If you remember, we had autumn, oranges and browns in the autumn. We had Christmas, poincianas and Christmas trees at Christmas and Spring cherry blossoms in the spring. In this hotel, huge, if you can imagine the floats of the Rose Bowl parade, but imagine instead that they are intricate, five, six, seven-meter-tall sculptures that are 10 or 12 meters wide on variable height lifts that are like wedding cakes.
These things vary from a full carousel of horses like a merry-go-round that go round and round and up and down to calliope music, to hot air balloons of multicolors like in Around the World in 80 Days, to peacocks and tigers and other fanciful objects that change every month, all made of real flowers. These are multi-story atrium that go up, and these kinds of fantasies take place to music 24/7. Am I beginning to shape the picture for you, Harry? Or did you leave? I don't know if there's question here.
Yeah, I think Harry dropped out. We have one last question.
We do. Our final question comes from Robin Farley of UBS.
Robin.
Great. Thanks. I have two questions. One is-
Robin, did you hear what I just said? Robin, could you hear me?
Yeah, all of that. I'm not sure what happened to the last question, but we could all hear you. We heard all of the great descriptions. Thanks for sharing that.
He was asking what the features are, so I was starting to discuss some of them. Okay.
That was great to get that level of detail. I wanted to ask if you have expectations for timing of anything in Japan.
No. You can read the newspapers, you know all about what happened in the election, and you know that they've got an initiative to consider it during 2014. Where that takes the government and what they will do to follow through is unknown at the present time. There's certainly speculation. We all are paying very close attention, but to say of anything with any degree of certainty would be totally speculative at this point.
Does that affect your level of interest or the degree to which you're pursuing things there?
I would sure as heck be interested in Tokyo or Osaka if we were given the opportunity. Naturally, Robin, we'd have to measure the business opportunity, tax rate rules, all that sort of thing. I'm assuming that if Tokyo did a thing like that, the government in Tokyo did a thing like that, they'd probably follow the successful models of Macau and Singapore or something like that. I would imagine if they do legalize it in Tokyo, we'll all be hot after it.
Great. My other question was just getting a little bit more into the market share shift on the peninsula among the premium mass. I know there were some comments earlier about how hyper-competitive that is. I wonder if you could just-- there are moving pieces here with, you added new capacity that I guess was there for two-thirds of the quarter, the high-end slot area. I think you mentioned something about hold issues in the month of June. It sounded like you were making that comment about the slot business, maybe I misheard you. I just wanted to clarify, basically, these different moving pieces, and now going forward, that once you have your high-end slot room in place, I guess, how you expect market share to play out versus how it did in Q2.
Well, Robin, the level of inquiry that your question represents, it gets into crystal ball stuff. When Ian made the remark earlier that the guys got smart, they did a better job with their high-end slot areas and got a little ahead of us, then we caught up, and we've redone a bunch of areas to make them sexier. It looks good to us now, and a lot of bigger players came, they won some big jackpots. Hold fluctuated a little bit. On the amount of coin in, it matters. It really doesn't. It really doesn't matter at all. This mass gaming area and our ability to hold customers and to grow or to hold our position in the face of Cotai and the other competitors is something that you just have to watch play out.
Remember I said that we were up over July, but we were down in June. It bounces around in our place because we get so many big players. It's hard to quantify this. I know we try all the time. To tell you the truth, Robin, it's sort of a waste of time for all of us. I think you have to look at the macro trends. Whatever Robert Gansmo said about the whole percentage in June doesn't matter much because it's offset by the whole percentage in July. I really don't want to go there. It's the kind of super detail that seems to matter on these kinds of calls, but really amounts to nothing in the long run.
Great. Thank you.
Yeah.
We have no further questions at this time. I would like to now return the floor to management for any closing remarks.
No, it's nice talking to you. We'll see you in 90 days, and we'll see what happens then. Maybe we'll hear about other jurisdictions and such things. Thank you, everybody.
Thanks.
Thank you.